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July 6, 2017

PATH Foundation buying Walker Drive office space

Photo/Lawrence Emerson
The PATH Foundation will buy these two floors of this building under construction at 321 Walker Drive in Warrenton.
This rendering depicts the finished building’s east side, where Old Town Athletic Club will occupy the lower level.
It is a milestone in that it puts to bed an issue we knew we were gonna have to address almost from the moment the foundation started.
— PATH Chairman John McCarthy
PATH Foundation HQ
• Where: 321 Walker Drive, Warrenton

• Space: 20,000 square feet, top two floors of three-story building under construction.

• Purchase: Approximately $4 million, with closing planned in September.

• Occupancy: Early 2018, after interior build-out.

• Features: Offices for PATH Foundation, its volunteer center and resource center, which operates under contract; meeting room for up to 100 people; space for other initiatives, including possible mental health services.

• Sellers: Kim and Mike Forsten, who also have constructed two adjacent office/fitness club structures.
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Editor
The Warrenton-based PATH Foundation has selected its permanent headquarters.

Endowed with proceeds from the sale of Fauquier Health in 2013, the philanthropic organization has a contract to buy two floors of an office building under construction on Walker Drive in Warrenton.

PATH will pay approximately $4 million for 20,000 square feet, President/CEO Christy Connolly said Wednesday.

Old Town Athletic Club owners Kim and Mike Forsten last year started building the 34,000-square-foot structure at 321 Walker Drive. “OTAC III” will house another expansion of the Forstens’ fitness business on the lower level.

The foundation, the PATH Volunteer Center and the PATH Resource Center will have the top two floors.

“It is a milestone in that it puts to bed an issue we knew we were gonna have to address almost from the moment the foundation started,” PATH Chairman John McCarthy said.

Mr. McCarthy and Ms. Connolly said they regard the foundation’s health-focused programs as more important than office space.

“But, it’s kinda of like a car and the journey,” the chairman added. “You’ve got to have the former to make the latter.”

Since October 2014, the foundation has leased 3,600 square feet on the fourth floor of the office building at 98 Alexandria Pike in Warrenton. It later rented another 1,600 square feet on the building’s second floor for the volunteer and resource centers.

PATH has 10 full-time, two part-time employees and nine college interns this summer. The staff could grow by a few more over the next several years, according to Ms. Connolly. The resource center, operating under a contract with the foundation, has three employees.

The new space — including a meeting room for up to 100 people — will address a range of community needs, she explained. Nonprofit groups, “even the school system” struggle to find adequate meeting space, Ms. Connolly said.

Additionally, as it responds to the region’s significant mental health service needs, PATH could end up housing administrative functions for some of those programs in the Walker Drive building.

As PATH leaders a couple of years ago began considering options for permanent space, they found relatively few options.

The foundation wanted to stay in Warrenton — central to its service area of Fauquier, Rappahannock and northern Culpeper counties — and with the best broadband service, Ms. Connolly said.

“We were not interested in building a monument,” Mr. McCarthy said. “We explored being a part of the downtown renovation, but we couldn’t find anything that met our space needs . . . .

“We wanted something functionally good, without feather-bedding. We’ll end up buying office space that should be good for our needs for at least 10 years and hopefully longer. And, it will be an asset to PATH that we could monetize (sell or rent) at some point, if that became desirable.”

The foundation has about $170 million “under management” in investment accounts and total assets of $234 million, including some medical offices and 20 percent of Fauquier Health, according to PATH Chief Financial Officer Lorna Magill. (Tennessee-based LifePoint owns 80 percent of the local hospital and related businesses.)

“We’ve been trying to diversify our investments, and this will help us do that,” Ms. Magill said of the planned office purchase.

If all goes well, PATH could move early next year. The foundation has hired Warrenton architect James Hricko to design the interior. The foundation will buy an unfinished shell.

PATH has two years remaining on the main Alexandria Pike lease, which it will honor, Ms. Connolly said. It might offer space there to nonprofits that need offices.

The new brick building on Walker Drive features large windows and a patio on the south side.

PATH started negotiations for the new space late last year and recently reached an agreement with the Forstens, according to Ms. Connolly.

“It’s fantastic,” Mr. Forsten said. “What they’re gonna do for Fauquier, Rappahannock and Culpeper is awesome — the whole health lifestyle focus. As far as I’m concerned, you couldn’t ask for a better partner in this building."

“It continues OTAC’s effort to develop a ‘health campus’.”

In addition to the fitness business, health care professionals own office condos in the other two OTAC buildings, just inside Warrenton’s Eastern Bypass.

Under a development proposal that the Warrenton Town Council will consider next week, the three OTAC buildings would form part of a 31-acre, mixed-use development along Walker Drive. (Mayor Powell Duggan, a lawyer who represents PATH, will recuse himself from the rezoning deliberations.)

PATH’s board has not decided whether to pay cash or to incur debt for the new space, Mr. McCarthy said.

If the foundation can borrow money at a lower interest rate than its investments produce, debt might make sense, he explained.

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citizen observer · July 6, 2017 at 9:02 am
Office buildings like this is what should be built on Walker Drive. Not more corporate restaurants, retail stores, and apartments.
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